The NZD/USD pair, also known as the Kiwi, continued in its uptrend today, climbing toward critical resistance as the anti-USD mood persists in the markets.
Chinese data spur optimism
The Gross Domestic Product (GDP) of the world’s second-largest economy, China, grew by 2.9% year-over-year in the September-December quarter, according to official data released by the National Bureau of Statistics (NBS) on Tuesday, surpassing the 1.8% consensus forecast and decelerating from the 3.9% growth rate in the previous quarter.
China’s GDP grew by 0% in the fourth quarter, compared to a projected 0.8% decline and 3.9% increase in the preceding quarter. In 2022, China’s GDP expanded by 3.0% annually.
According to the official statistics, Final consumption contributed 32.8% to GDP growth in 2022, Capital creation contributed 50.1% to GDP growth in 2022, and Net exports contributed 17.1% to GDP growth in 2022.
Additionally, China’s December Retail Sales decreased by 1.8% compared to -the 7.8% projected and -5.9% before, while the nation’s Industrial Production increased by 1.3% compared to 0.5% predicted and 2.2% previously.
In December, Fixed Asset Investments decreased by 5.1% relative to the 5.0% predicted and 5.5% before.
USD is expected to drop further
The dollar continued to decline on Tuesday as investors are convinced it has reached a peak, as the US Federal Reserve is nearing the end of its rate-hiking cycle and inflation is declining.
For instance, Morgan Stanley lowered its projection for the dollar index at the end of 2023 from 104 to 98. Currently, it trades near 102.30, down from its highs near 115 in October 2022.
“Global growth is showing signs of buoyancy, macro and inflation uncertainty are waning, and the USD is rapidly losing its carry advantage,” analysts at the investment bank said in a note.
The only US data release today will be the manufacturing barometer assessed by the New York Empire State Index, which will be followed by short-term auctions and a speech by NY Fed J. Williams.
More data will come on Wednesday, including US retail sales and PPI inflation, causing market volatility.
As previously mentioned, the significant resistance of previous highs lies in the 0.6470 region. If the NZD jumps above it, the uptrend would be confirmed, likely sending the pair toward the psychological level of 0.70 later this year.
NZD/USD daily chart, source: author´s analysis, tradingview.com